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Editorial - Rural Economic Development Center’s goals remain worthy

Published: Monday, August 5, 2013 at 11:32 p.m.

Last Modified: Monday, August 5, 2013 at 11:32 p.m.

The purpose of the N.C. Rural Economic Development Center was to help bring economic development to some of the poorest areas in the state. But too little oversight and too much of a pay-to-play culture tainted its mission and stifled its results.

Former Director Billy Ray Hall had a grand vision when he became director of the N.C. Rural Economic Development Center – to help bring the prosperity and growth North Carolina cities were enjoying to the state’s poorest rural communities. Twenty-five years later, there were some successes but of late, much of the job creation was in low-wage, part-time work such as fast-food restaurants and retail work.

And while millions of dollars in taxpayer money were flying out the door, accountability and oversight were badly lacking, as State Auditor Beth Wood, a Democrat, found in a recent audit. She also was critical of the $221,000 salary being paid to Hall, who resigned following the scathing report.

Meanwhile, Gov. Pat McCrory temporarily froze spending by the center. Some grants have since been freed up. Budget Director Art Pope has declared his intention to recover what he says may be $100 million controlled by the center. For now, most recipients in our area, such as the Brunswick County Economic Development Commission, say they expect their funding to be unaffected by the rural center’s problems. Regardless of the center’s failings, those groups depend on funding to help in recruitment efforts.

McCrory and the General Assembly had previously moved toward consolidating rural economic development under a program overseen by the N.C. Department of Commerce. McCrory has been concerned about the number of agencies dealing with economic development and had expressed preference for a more centralized program.

There are good arguments for having an agency that is focused on expanding economic opportunities in rural areas, which often lack infrastructure and a skilled workforce. The problems of rural areas are not the same as those of cities, and their interests often get shoved aside by the larger metropolitan areas.

But while the early years of the Rural Economic Development Center showed some successes, over the years political cronyism and complacency have eroded the original mission. The board of directors included members whose organizations got grants from the center while serving – a conflict of interest with the potential for corruption.

Wood’s audit found that the center failed to enforce reporting requirements on $59 million in grants awarded in 2012 alone, and that roughly $20 million in interest earned on investments had not been poured back into the grant pool.

The taxpayers have a right to expect detailed accounting of how their money is spent, and that any agency that controls so much money have in place a policy that doesn’t allow the people who make decisions to benefit from the grants that are approved.

Given Wood’s audit, McCrory was justified in putting the hold on spending until officials can delve a bit deeper into the center’s financial history. But regardless of what happens with the center in its current form, the governor must not let his big-city mentality cloud the need to address the economic inequity between North Carolina’s urban and rural areas.

McCrory must make it his administration’s mission to erase that inequity by helping rural areas do what is necessary to attract new businesses – particularly the types of business that pay a living wage and offer long-term opportunities for residents of those communities.

<p>The purpose of the N.C. Rural Economic Development Center was to help bring economic development to some of the poorest areas in the state. But too little oversight and too much of a pay-to-play culture tainted its mission and stifled its results.</p><p>Former Director Billy Ray Hall had a grand vision when he became director of the N.C. Rural Economic Development Center – to help bring the prosperity and growth North Carolina cities were enjoying to the state's poorest rural communities. Twenty-five years later, there were some successes but of late, much of the job creation was in low-wage, part-time work such as fast-food restaurants and retail work.</p><p>And while millions of dollars in taxpayer money were flying out the door, accountability and oversight were badly lacking, as State Auditor Beth Wood, a Democrat, found in a recent audit. She also was critical of the $221,000 salary being paid to Hall, who resigned following the scathing report.</p><p>Meanwhile, Gov. Pat McCrory temporarily froze spending by the center. Some grants have since been freed up. Budget Director Art Pope has declared his intention to recover what he says may be $100 million controlled by the center. For now, most recipients in our area, such as the Brunswick County Economic Development Commission, say they expect their funding to be unaffected by the rural center's problems. Regardless of the center's failings, those groups depend on funding to help in recruitment efforts.</p><p>McCrory and the General Assembly had previously moved toward consolidating rural economic development under a program overseen by the N.C. Department of Commerce. McCrory has been concerned about the number of agencies dealing with economic development and had expressed preference for a more centralized program.</p><p>There are good arguments for having an agency that is focused on expanding economic opportunities in rural areas, which often lack infrastructure and a skilled workforce. The problems of rural areas are not the same as those of cities, and their interests often get shoved aside by the larger metropolitan areas.</p><p>But while the early years of the Rural Economic Development Center showed some successes, over the years political cronyism and complacency have eroded the original mission. The board of directors included members whose organizations got grants from the center while serving – a conflict of interest with the potential for corruption.</p><p>Wood's audit found that the center failed to enforce reporting requirements on $59 million in grants awarded in 2012 alone, and that roughly $20 million in interest earned on investments had not been poured back into the grant pool.</p><p>The taxpayers have a right to expect detailed accounting of how their money is spent, and that any agency that controls so much money have in place a policy that doesn't allow the people who make decisions to benefit from the grants that are approved.</p><p>Given Wood's audit, McCrory was justified in putting the hold on spending until officials can delve a bit deeper into the center's financial history. But regardless of what happens with the center in its current form, the governor must not let his big-city mentality cloud the need to address the economic inequity between North Carolina's urban and rural areas.</p><p>McCrory must make it his administration's mission to erase that inequity by helping rural areas do what is necessary to attract new businesses – particularly the types of business that pay a living wage and offer long-term opportunities for residents of those communities.</p>